Amazon goes into student loan business, sort of ……

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This week a partnership between Amazon and Wells Fargo was announced. Members of Amazon Prime Student will receive a 0.5 percent interest rate discount on student loans taken out through Wells Fargo’s Education Financial Services.

Questions:
1. Why are financial advisors wary of the deal?
2. How much did the Washington Post calculate a student would save on a $10,000 loan over 10 years, including the additional discount offered with automatic monthly loan repayment? Explain whether this is really a deal.
3. What is the goal of this partnership?
4. What role does each partner have in this venture?

Source:

Lindsay, R. (2016). Amazon offers Prime members discounted student loans. Is that fair? The Christian Science Monitor, July 22 (Retrievable online at http://www.csmonitor.com/Business/2016/0722/Amazon-offers-Prime-members-discounted-student-loans.-Is-that-fair)